Enough About Retirement Already!

401(k) Plans|Wealth Management

By Jeffery Acheson

As someone who has spent more than 30 years working with people to help them prepare for a financially sound and secure retirement, I can talk about it endlessly. At least that is how it seems to some people, including my 25-year-old son. As background, he landed a new position with a large company providing an outstanding benefit package. I quite enthusiastically offered to help him work through evaluating all his various benefit options to make sure he ended up with an optimal configuration.

When we came to the 401(k) Plan, he, knowing full well what I do for a living, quite sheepishly asked, “Dad, do I really need to worry about retirement? That is like 50 years from now!” Normally, I would have gone into my usual passionate explanation (complete with an overwhelming number of charts and statistics) of why he absolutely should begin to worry about retirement even at the ripe old age of 25. However, of late I have been rethinking my communication strategy with younger people, especially those in their 20s, on this important topic. So, I decided it was time to experiment!

My strategic response to my son was, “You’re right, you don’t need to worry about retirement right now. (He looked momentarily relieved.) But, you are still going to enroll and here’s why. (Now a deflated look.) My experience tells me you will not be a good saver at your age and you also won’t believe how fast the next six years will fly by. Putting retirement aside for a moment, how would you like to reach age 31 with approximately $30,000 tucked away that is all yours?” His inquisitive response was an immediate, “Yes, but how?”

I then went on to explain the 401(k) math of how if he deferred just the amount that would receive the maximum employer match and he stayed with his new employer for just the six years required to be fully vested, he, based upon investment market performance, should have around $30,000 in his account by age 31. As a disclaimer, I also explained the withdrawal restrictions and tax implications. But, at that point, the motivation for enrolling was already intact and he enthusiastically filled out his paperwork accordingly.

The learning lesson for me is perhaps planning for retirement is best accomplished as it is with all goals in life, which is with short-term, intermediate and long-term targets to help us gain perspective, focus and maintain motivation. After all, it is hard to accumulate sufficient assets for financial independence in retirement if we don’t first accumulate the first (or next) $10,000, $20,000 or $30,000. So, enough about retirement already! Let’s focus on what we can accumulate every five years and perhaps our “retirement” nest eggs may just take care of themselves.

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